austin3515

I agree, today he doesn't want another one. But what about in a year? Or even 6 months?

Bill, I had the same thought. But then let's say for example he wants another loan. Do we let him take it? I suppose the answer is yes because for him, the loan has been repaid via an offset, but I'm a littl iffy on the logistics. But I also like the idea of amending the loan program to allow this. I've definitely read about this type of transaction somewhere so I know it's doable. I'm just a little iffy on the mechanics.

Participant is eligible for an in service distriubtion, and wants to offset his participant loan via an in-service distriubtion without actually taking the money out of the Plan. Can he just fill out an election form to that effcet? I know this is POSSIBLE, but does the document specifically need to allow this form of distribution?

I'm sure the auidoit covered a full 12 months. The confusion relates (presumably( to the fact that the plan was terminated effective 11/30/09, which does NOT create a shprt plan year (at least for 5500 reporting purposes). So if a) you terminated the plan such that no one is eligbile to participate asof 11/30/2009 and b) less than 100 participants have account balances, then you do not need an audit. The employees who elected not to participate (and who terefore have no balances) are no longer considered participants in the plan folloowing the terminaiton date.

GMK, just make sure this new enhancement complies with your document. The way most "payroll to payroll" matches are written, you ONLY look at the deferralsd and comp in that specific pay-period.

It doesn't matter whether they actually defer - it only matters if the employer sponsors or maintains another plan. We've been over this every way till Tuesday and have concluded it cannot be done. (KVein, the new owner will want to participate!)

Company A is a sole proprietor, no employees, and sponsors a solo 401k. Company A wants to buy Company B, which sponosrs a 401k plan with employees. The surviving plan will be Company B's plan. Owner of Company A would like to get his money into an IRA account before he buys the other company. The closing is scheduled so this is all basiclaly a sure thing. If he terminates his plan (i.e., Company A's Plan) and rolls his balance to an IRA before he acquires company B, will his rollover be deemed ineligible for rollover?

JackPot (courtesy of TAGData) EPCRS (2008-50), 6.06(2), a little more than halfway through that giant paragraph: If an Excess Allocation resulting from a violation of § 415 consists of annual additions attributable to both employer contributions and elective deferrals or after-tax employee contributions, then the correction of the Excess Allocation is completed by first distributing the unmatched employee’s after-tax contributions (adjusted for earnings) and then the unmatched employee’s elective deferrals (adjusted for earnings). If any excess remains, and is attributable to either elective deferrals or after-tax employee contributions that are matched, the excess is apportioned first to after-tax employee contributions with the associated matching employer contributions and then to elective deferrals with the associated matching employer contributions. Any matching contribution or nonelective employer contribution (adjusted for earnings) which constitutes an Excess Allocation is then forfeited and placed in an unallocated account established for the purpose of holding Excess Allocations to be used to reduce employer contributions in the current year and succeeding year(s). Such unallocated account is adjusted for earnings. While such amounts remain in the unallocated account, the employer is not permitted to make contributions (other than elective deferrals) to the plan.

My professional opinion is that this is a mistake of fact (at least that's the position we're taking, but of course EVERYTHING is subject to 2nd guessing). It is not simply that he didn't earn enough. It was a misunderstanding regarding how the income would be reported on the tax return. But of course, we will be including the requisite CYA language. P.S., thank you very much for the site in the Corbel document!!

I only keep score when I'm winning so I have no idea...

I agree with you on the "anyone deferring and not getting the match would be a zero in your coverage test." But you also need to run BRF.

You've got two match formulas: Graded Match - 0% on 0 to 4.999%, and then 100% on 5% or greater Graded Match - 0% on 0 to 4.999%, and then 140% (right??) on 5% or greater if you have at least 10 years. So, you need to make sure the people covered by each formula passes benefits rights and features.

Sieve, in light of you vast and extensive contributions I will over-look your oversigth regarding the changes to the final 415 regs which now require that the sole means of correcting 415 violaqtions is through EPCRS

From 1(a) above: To the extent that the excess annual additions relate to elective deferrals or after-tax employee contributions, the corrective mechanism is to distribute the excess amount (with attributable earnings). See section 6.06(2) of the EPCRS Procedure. An ordering rule is prescribed for making the correction when the violation involves IRC §415:> This is what I'm talking about!!!

K2 - right on! Once I gave up on the 415 correction, I decided to look into my other problem, max deductible. Does the Corbel EGTRRA 401k prototype allow for a refund of employer contriutions based on revenue ruling 91-4 (i.e., contribtion exceeds max deductible due to a mistake of fact). I did not see it... Does it need to be in the document? In my case, the CPA thought the LLC was being taxed as a partnerhsip, but it was an S-corp, and W-2 wages did not suport it. Not sure if you agree, but we think a) this was definitely a mistkae, and b) the "fact" was the form of entity regarding which the CPA was mistaken (I'm pretty sure it switched in 2010)!

Plan where the employee made $30,000 and did 16,500 of 401k and did another $20,000 of profit sharing. Solo 401k plan so they're all the owners additions. In EPCRS it keeps saying "if the excess is attributed to elective deferrals" do this, and "if attributable to something else" do that. How do I determine which it's related to? It's not any one dollar, but all of the dollars in total.

1.401(k)-3(b)(1)General rule.— The safe harbor nonelective contribution requirement of this paragraph is satisfied if, under the terms of the plan, the employer is required to make a qualified nonelective contribution on behalf of each eligible NHCE equal to at least 3% of the employee's safe harbor compensation. To me, that is a pretty aggressive interpreatiopn when, to me, it is entirely clear that the spirit of the reg is to allow you to require (as is the case here) 5% without violating the rules.

Corbel 403b prototype document says profit sharing contriubtions will be discretionary, but ALSO has an option for a "One time Irrevocable Election. An amount elecrted by the Participant pursuant to a one time irrevocable eellection upon initial eligiblity. The elected amount will be allocated to the Particpants Nonelective account." What in the world is this? How often does the participant make this contribution? Is it "one time" as might be gathered from the name, or is it on going deferral type of thing (I get the irrevocable makes it not be a CODA). And then I assume it is subject to a4 testing, which could be problematic say if the only person doing it is the executive director making $200K?

So you are going to allocate a contriubtion that is not included in the document? I just don;t feel right about it. You need something more than a notice to get it not to be profit sharing, subject to profit sharing alloation rules. At least that's what I think...

We're not suggesting that there is anything discretionary about a SHNEC- are we? So for exampole, the client couldn't arbitrartily decide in March following the end of the plan year that this year the SHNEC will be 5%, right? For starters, I think all those people who were employed on the last day of the plan year would have a cut-back in profit sharing contributions since terms are excluded (hypotehtically); i.e., if the extra money was allocated as SHNEC and not PS.

Owner defers $21,000, and ADP test fails. About $400 of the 16,500 included in the test is reclassed as catch-ups before I try anything fancy. Can I still make it all the way to 54,500? I can allocate my employer contributions of $33,500 first Then, I can do my 401k of 15,500 which puts me at the 49,000. So now, I have a full $5,500 of catch-up contributions ($21,000 less $15,500 included in the "sub-415" contributions), which means that only $15,500 is in the ADP test, which would be passing. Does everyone agree with that?

If 10 people come to a meeting, the way we do it now perhaps 2 return the forms. If we can get that up 3 or 4, then it was worth it. I'm not shooting for the stars here, just a notable improvement...

Jim, are you saying that you are using language like this: "Subject to changes that I may make to my investment elections, I hereby elect to invest my Plan account in the Wonderful Balanced Fund."

Amen.

I'm not throwing my clients under the bus by any means. Most of them are quite brilliant at what they do. It's just that what they do is not administering 401k plans. It's ubuilding homes, installing windows, treating patients, and on and on.